Financial
Literacy
National PASS Center
2013
4
Unit
National PASS Center
Geneseo Migrant Center
3 Mt. Morris-Leicester Road
Leicester, NY 14418
(585) 658-7960
(585) 658-7969 (fax)
www.migrant.net/pass
Authors:
Kate Warner
Linda Shanks
Sally Fox
Valerie Putney
Editor:
Sally Fox
Proofer:
Donna Katter
Formatting:
Eva McKendry
Kate Warner
Graphics:
Eva McKendry
Kate Warner
Linda Shanks
Sally Fox
Valerie Putney
Readability:
Flesch – Kincaid Grade Level
Flesch Reading Ease
4.7
78.0
Developed by the National PASS Center with funding from the Strategies,
Opportunities, and Services to Out-of-School-Youth (SOSOSY) Migrant
Education Program Consortium Incentive under the leadership of the Kansas
Migrant Education Program.
Academic
&
Career
Readiness
1
Lesson
Skills
What is a Budget?
Words to know:
√
√
√
√
√
√
√
D
budget
income
expenses
fixed expenses
variable expenses
balanced budget
unbalanced budget
o you spend all the money in your pocket? Do you put aside money to pay
bills?
A budget is a plan of action for your money. It helps you match your expenses to
your income. Expenses are the amount of money you spend. Income is the amount
of money you earn. A budget can help you make decisions about how you will spend
your money. Making a budget can help you plan for the future.
Why Have a Budget?
Making a budget helps you have enough money to pay your bills. Having a plan
can also help you save money. If you do not use a budget, you may run out of money.
Unit
1
4
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Lesson
1
Academic
&
Career
Readiness
Skills
How to Make a Budget
You can make a balanced budget. First, list your monthly income. Next, list
your expenses. There are two types of expenses. Fixed expenses stay the same.
They are the bills you pay every month. A fixed expense might be your rent or a car
payment. Variable expenses do not stay the same every month. A variable expense
might be a telephone or heat bill.
After listing your monthly expenses, add them together.
Balanced budget – when you earn more than you spend.
Monthly income........ $1,225
Expenses
rent ........................ $ 500
car payment .......... $ 250
food ....................... $ 200
phone .................... $
50
utilities ................... $ 100
gas ........................ $ 100
Total expenses ........ $1,200
Then subtract your total expenses from your monthly income.
Monthly income.......
$1,225
Monthly expenses ...
– $1,200
Money left over .......
Unit
4
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Financial
$
25
Literacy
2
Academic
&
Career
Readiness
Skills
The amount left over can be saved. A budget helps you make sure you have
money to pay for the things you need. You may also save some money.
People who do not have a budget might spend more than they earn. When you
spend more money than you earn, you have an unbalanced budget.
Unbalanced budget – when you spend more than you earn.
Monthly income ......... $1,225
Expenses
rent ......................... $ 500
car payment ........... $ 200
food ........................ $ 250
phone ..................... $ 150
utilities .................... $ 150
gas ......................... $ 150
Total expenses ......... $1,400
In this example you will subtract the monthly income from the total expenses.
Total expenses ........
$1,400
Monthly income ..... ...
– $1,225
Amount over income
$ 175
If you spend more money than you earn, you will never have enough money. You will
have debt. You will owe money.
Unit
3
4
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Lesson
1
Academic
&
Career
Readiness
Skills
Try these examples:
A. Monthly income = $1,500
Add these expenses:
Subtract the total expenses from the
rent ............................. $400
income:
gas .............................. $150
Monthly income ............___________
food ............................. $225
Monthly expenses .....– ___________
electric ........................ $100
Money left over.............___________
Total expenses .............._______
B. Monthly income = $2,000
Add these expenses:
Subtract the total expenses from the
rent ............................. $400
income:
gas .............................. $250
car payment ................ $190
Monthly income ............___________
food ............................. $275
Monthly expenses .... – ___________
electric ........................ $150
Money left over.............___________
Total expenses .............._______
Unit
4
–
Financial
Literacy
4
Academic
&
Career
Readiness
Skills
Now try these examples. Do they show a balanced or an unbalanced budget?
C. Monthly income = $1,200
Add these expenses:
rent ............................. $500
Compare the total expenses and
income:
gas.............................. $180
Monthly income ............ ___________
car insurance .............. $ 50
Monthly expenses ........ ___________
food ............................ $275
What is the difference? ___________
Total expenses.............. _______
Check ():
Balanced  or Unbalanced 
D. Monthly income = $1,000
Add these expenses:
rent ............................. $550
Compare the total expenses and
income:
gas.............................. $250
Monthly income ............ ___________
car insurance .............. $ 75
Monthly expenses ........ ___________
food ............................ $255
What is the difference? ___________
electric ........................ $100
Total expenses.............. _______
Check ():
Balanced  or Unbalanced 
Unit
5
4
–
Lesson
1
Academic
&
Career
Readiness
Skills
E. Monthly income = $1,290
Add these expenses:
Compare the total expenses and
income:
rent ............................. $550
gas .............................. $250
Monthly income ............___________
car insurance .............. $ 75
Monthly expenses ........___________
food ............................. $300
What is the difference? ___________
electric ........................ $250
Check (): Balanced  or Unbalanced
Total expenses .............._______

Expenses: Mark () each of the items on this list as variable or fixed expenses.
1.
Car insurance
 Fixed expense
 Variable expense
2.
Bus fare
 Fixed expense
 Variable expense
3.
Food
 Fixed expense
 Variable expense
4.
House payment
 Fixed expense
 Variable expense
5.
Entertainment
 Fixed expense
 Variable expense
6.
Bank loan
 Fixed expense
 Variable expense
7.
Household items
 Fixed expense
 Variable expense
8.
Clothing
 Fixed expense
 Variable expense
9.
Health insurance
 Fixed expense
 Variable expense
 Fixed expense
 Variable expense
10. Personal items
Unit
4
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Financial
Literacy
6
Academic
&
Career
Readiness
Skills
Now calculate the total fixed and variable expenses for each example.
11. In September, María had the following expenses:
$740 for house payment
$33 for personal items
$142 for food
$87 for entertainment
Total fixed expenses __________
Total variable expenses _____________
12. In April, Ben had the following expenses:
$267 for car payment
$122 on a bank loan
$100 for savings
$40 for household items
$86 for groceries
$18 for movie rental
Total fixed expenses __________
Total variable expenses _____________
13. In June, David had the following expenses:
$670 for rent
$194 for car payment
$86 for clothing
$215 for car repairs
$120 for food
Total fixed expenses ___________
Total variable expenses ______________
Unit
7
4
–
Lesson
1
Academic
&
Career
Readiness
Skills
Wants Versus Needs
You may buy things because you want them. But do you really need them? Are
they necessary? Needs are the things that are important to live. Three basic needs
are food, clothing, and shelter. Wants are things that you would like to have, but don’t
need to live. Examples are a flat screen TV, jewelry, or a hot tub.
Mark () each of the items on the following list as a need or a want.
ITEM
WANT
NEED
14. Heat
15. Designer clothes
16. Candy
17. Housing
18. Beer
19. Food
20. Comic books
21. Income
22. Electricity
23. Shoes
24. How could you solve the problem of an unbalanced budget?
________________________________________________________________
________________________________________________________________
________________________________________________________________
Unit
4
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Financial
Literacy
8
Academic
&
Career
Readiness
Skills
When to Change your Budget:
 Change your budget if you spend more than you earn.
 Change your budget if your income or expenses change.
Now you try!
25. Develop your own budget by filling in this chart.
Monthly income = $
Enter your expenses:
rent ............................. $________
gas.............................. $________
Compare your total expenses and
income:
car insurance .............. $________
Monthly income ............ ___________
food ............................ $________
Monthly expenses ........ ___________
electric ........................ $________
What is the difference? ___________
other ........................... $________
................................... $________
Check ():
Balanced  or Unbalanced 
................................... $________
Total expenses.............. $__________
Unit
9
4
–
Lesson
1
Academic
&
Career
Readiness
Skills
Show what you know. Respond to these statements based on what you learned in
this lesson.
26. Define a budget.
________________________________________________________________
________________________________________________________________
27. Describe the benefits of making a budget.
________________________________________________________________
________________________________________________________________
28. Identify variable expenses.
________________________________________________________________
________________________________________________________________
29. State what it means to have an unbalanced budget.
________________________________________________________________
________________________________________________________________
30. Discuss the difference between needs and wants.
________________________________________________________________
________________________________________________________________
 End of Lesson 1 
Unit
4
–
Financial
Literacy
10